Variable manufacturing costs per year (a) Compute the income increase or decrease from replacing the old machine with Machine A. (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Req A Complete this question by entering your answers in the tabs below. Req C and Di Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be deducted should be indicated with a minus sign.) Req B Machine B: Keep or Replace Analysis Revenues Sale of existing machine Costs Purchase of new machine Vanable manufacturing costs Income (loss) $ 125,000 19,000 Keep 0 $ 5 138,000 14,000 < Req A Replace income increase (Decrease) from Replacing 0 $ Req C and D > < Prev 6 of 9 0 ### Next >

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $48,000 and a
remaining useful life of four years. It can be sold now for $58,000. Variable manufacturing costs are $48,000 per year for this old
machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is four
years.
Purchase price
Variable manufacturing costs per year
(a) Compute the income increase or decrease from replacing the old machine with Machine A.
(b) Compute the income increase or decrease from replacing the old machine with Machine B.
(c) Should Lopez keep or replace its old machine?
(d) If the machine should be replaced, which new machine should Lopez purchase?
Req A
Complete this question by entering your answers in the tabs below.
Req B
Req C and D
Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be deducted should be
indicated with a minus sign.)
Machine B: Keep or Replace Analysis
Revenues
Sale of existing machine
Costs
Purchase of new machine
Vanable manufacturing costs
Income (loss)
Machine A
$ 125,000
19,000
$
Keep
Machine B
$ 138,000
14,000
0 $
< Req A
Replace
Income increase
(Decrease) from
Replacing
0 $
Req C and D >
< Prev
6 of 9
Next >
Transcribed Image Text:Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $48,000 and a remaining useful life of four years. It can be sold now for $58,000. Variable manufacturing costs are $48,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is four years. Purchase price Variable manufacturing costs per year (a) Compute the income increase or decrease from replacing the old machine with Machine A. (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Req A Complete this question by entering your answers in the tabs below. Req B Req C and D Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be deducted should be indicated with a minus sign.) Machine B: Keep or Replace Analysis Revenues Sale of existing machine Costs Purchase of new machine Vanable manufacturing costs Income (loss) Machine A $ 125,000 19,000 $ Keep Machine B $ 138,000 14,000 0 $ < Req A Replace Income increase (Decrease) from Replacing 0 $ Req C and D > < Prev 6 of 9 Next >
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